Dion-Vera Suit Accuses Zuffa, White, & Silva of Interference with Contract

It appeared that the management dispute between Mark Dion and Brandon Vera was resolved in an arbitration hearing in front of the CSAC earlier this year. However, MMAPayout.com has learned that Dion filed suited against Vera and his new management team in civil court in California on May 1.

The complaint closely follows the contours of the arbitration proceedings, except for the inclusion of Zuffa, White, and Silva for allegedly interfering with Dion's management contract with Vera. Specifically the complaint alleges that Zuffa and its officials encouraged Vera to breach his contract with Dion and provided him with confidential emails to use in that effort.

Latest on HDNet v. Zuffa: Resolution by End of Summer Appears Likely

On April 9, a Federal Judge remanded HDNet Fights' declaratory judgment action against Zuffa to Texas state court. The case was officially reopened on April 15 and the proceedings to determine Couture's contractual status are progressing quickly. With HDNet's lawyers reportedly pushing the pace, a resolution of the case by the end of the summer appears more and more likely.

Court records obtained by MMAPayout.com show that Zuffa filed a motion to dismiss on April 21, while HDNet filed a motion for summary judgment on April 23. The motion to dismiss is scheduled to be heard on May 19, while the motion for summary judgment will be heard on June 2. However, details on the case will become increasingly difficult to obtain thanks to Zuffa's motion to seal the proceedings.

Shamrock v. Zuffa

Ken Shamrock filed suit against Zuffa yesterday in Nevada State Court. MMAPayout.com has not seen the complaint, however, based on the information available, it appears that the action is predicated on the company's now infamous retirement clause.

It seems that Shamrock signed a two-fight contract with Zuffa that included a third rematch with Tito Ortiz. Shamrock then announced his retirement. At that point Zuffa made an election, as is its right under the terms of its standard contract. The action alleges that Zuffa breached its contract with Shamrock when it changed that election upon Shamrock's announcement that he intended to return to fighting.

The standard retirement clause reads:

If at any time during the Term, Fighter decides to retire from mixed martial arts or other professional fighting competition, then ZUFFA may, at its election, (i) suspend the Term for the period of such retirement; (ii) declare that ZUFFA has satisfied its obligation to promote all future Bouts to be promoted by ZUFFA hereunder, without any compensation due to Fighter therefore; or (ii) elect to provide Fighter with notice of an Acceleration.

Based on the fact that Shamrock subsequently signed a contract and fought in EliteXC, it appears that Zuffa likely elected to suspend the term of the contract following Shamrock's retirement, and then elected to declare its obligation satisfied when Shamrock announced his intention to return.

More details to come.

HDNet v. Zuffa Remanded to State Court

MMAPayout.com has learned that the United States District Court for the Northern District of Texas has granted HDNet's emergency motion seeking remand of its lawsuit against Zuffa to Texas State court. Zuffa removed the declaratory judgment action concerning Randy Couture's promotional contract to Federal Court last month. The ruling represents a procedural victory for HDNet and Couture.

Senior Judge A. Joe Fish issued the ruling this afternoon. The central issue was whether or not HDNet's choice to enter into its contract with Couture through a specially established Nevada entity was proper, thus defeating the court's diversity jurisdiction, or whether it represented collusive manipulation, as claimed by Zuffa. From the order:

However, the court recognizes the danger inherent in second-guessing the motivation behind business decisions. As much as the defendant wishes this case to be an assignment case, there is no assignment here to scrutinize. The burden on the party claiming that it has been improperly denied its statutory right to removal is a heavy one (citations omitted). The timing and circumstances surrounding the formation of the HDNet Nevada entities presents circumstantial evidence of collusive manipulation, but without more the defendant has not discharged this heavy burden.

The cases that Zuffa relies on involve situations where the assignee entity could not demonstrate a legitimate raison d’etre other than for the destruction of diversity. Here, though the circumstantial evidence suggests the plaintiff might have been motivated in part by the underlying lawsuit, as with Ivanhoe Leasing, the court also finds the plaintiff “was also influenced by other factors unrelated to jurisdiction” (citation omitted). This court is confident that the issues between the plaintiff and the defendant can be adequately addressed in state court.

NOTE: A full writeup is available at Sherdog.com.

Former Executive Sues SUN Over Departure

Serious allegations about SUN Sports are contained in a press release that was submitted to MMAPayout.com. The allegations come on the heels of the company's announcement of a partnership with FSN:

DALLAS, TX — The former president of SUN Sports & Entertainment, Inc., who departed on March 7, 2008 after a year at the Mixed Martial Arts promoter of Art of War, has filed a $25 million lawsuit against SUN Sports & Entertainment, Inc., SUN Management Group, Inc., and Titan Securities of Dallas., claiming he was forced out of his job for questioning financial irregularities within the company, deceptive press announcements and what he believed was a huge conflict of interest by Titan executives.

John Buckeye Epstein filed the suit Friday against SUN Sports (pink sheets SSPE), not to be confused with SUN Sports owned by Fox Sports, claiming that CEO CJ Comu and Titan, acting as board members, illegally forced-out Epstein after he became very vocal regarding the financial management of SUN Sports.

"I can't believe the audacity of Mr. Comu; the company had no funds, credit cards are shut off, vendors are calling every day, employees are owed more than forty thousand dollars in back expenses, and the medical bill reimbursements of past fighters like Justin Eilers and Pedro Rizzo were not being paid. All this while Comu takes a limo to the airport ten miles away," Epstein said.

The suit alleges that Titan Securities was improperly involved in a huge conflict of interest, controlling the Board of Directors and the expenditure of funds, all without disclosures to the public, and that Titan conspired with Mr. Comu to cause the breach of Epstein's employment contract with SUN. It also alleges that Mr. Comu, SUN's CEO, never intended to fulfill his financial promises and commitments to Mr. Epstein.

Epstein added, "This is not a disgruntled employee case like most people assume when they hear an unhappy executive leave a company". Under Epstein's sports marketing direction, within a year Art of War was recognized as possibly the number two contender in producing Mixed Martial Arts events. "This is about an employee trying to fight for honest and ethical treatment of shareholders, vendors, fighters and employees who was thrown out of the company for his trouble. The problems at SUN are far-reaching. Just last week Mr. Comu signed for a nine-show tour (a start date of April 19th) with George Greenberg (Fox Sports Net's Executive Vice President, Programming & Production) with virtually nothing in the bank."

Moreover, Epstein goes on to explain the relationship with Titan Securities (FINRA or NASD Broker Dealer). "Brad Brooks' group at Titan was involved in drafting and approving SUN press releases to the public, at the same time having been a huge market maker in SSPE stock, all without disclosure to the public. It is just unbelievable".

A former business partner of Mr. Comu in SUN before Epstein, said, "There are people who invested thousands of dollars in a sports franchise that CJ sold and for over two years has never called them or repaid the amount of funds."

Epstein had been SUN president for a little over a year when the company announced his departure in March 2007, saying he was leaving to "pursue other interests."

Former Pride Owners Sue Zuffa Holding Companies, Fertittas

I have a new story up at Sherdog.com detailing the latest developments in the legal dispute over the Pride asset sale. The lead:

When Zuffa purchased Pride in March 2007, the MMA world immediately began anticipating the epic battles that would follow. However, the "Super Bowl of MMA" never materialized, and Zuffa ultimately abandoned the Pride brand in October.

Now, one year later, the acquisition appears set to provide the fireworks it initially promised -- only in the court room instead of the cage.

Nobuyuki Sakakibara, Ubon, and Dream Stage Holdings sued Pride FC Worldwide, both the Nevada and Japanese corporate entities, as well as Lorenzo and Frank Fertitta individually on April 2 in U.S. District Court in Las Vegas.

FULL STORY: Former Pride Owners Sue Zuffa Holding Companies, Fertittas

Xyience Update

The Las Vegas Review-Journal featured a pair of articles by John G. Edwards in recent days on the rise and fall of Xyience as well as the company's official sale. On April 1, the Judge overseeing the company's bankruptcy proceeding approved its sale to Manchester Consolidated for $15 million (mostly in the form of assumed debt).

The action looks set to continue in a potentially nasty civil suit filed by dissident shareholders against Xyience, its former directors, and companies controlled by the Fertittas. Unsecured creditors have also sued in federal court, asking that $14.8 million in assets be set aside from the Fertittas for the benefit of Xyience creditors.

Fraud Against Fedor?

The Korea Times reports:

South Korean prosecutors indicted the local chief of a Russian martial arts agency for fraud Monday after he allegedly used the publicity rights of Fedor Emelianenko, the famed Russian mixed martial arts fighter, without consent.

Emelianenko filed the suit early this month over a "shoddy" honey commercial that went on air on Korean cable television featuring his image. The world heavyweight champion sought 1.55 billion won ($1.6 million) in compensation from the president of Korea Sambo Federation and the head of a local apiculture agency whose honey product the commercial promoted.

Couture Litigation Grows More Complex

The legal war between Randy Couture, Zuffa and HDNet Fights continues to heat up with the parties engaged in an increasingly complex set of litigation that includes two separate lawsuits, in Nevada and Texas respectively, and now an arbitration proceeding in Nevada.

On March 7, Zuffa filed for arbitration on Couture's promotional contract, pursuant to the terms of the agreement, in Nevada district court. The action marks the first time that Zuffa has formally made the promotional contract the issue of legal proceedings.

According to Zuffa, the proceeding will "necessarily require resolution of disputes between Zuffa and Couture over key terms of the promotional agreement," including those at issue in the HDNet Fights declaratory judgment action in Texas state court.

The action also continues in Texas. On March 13, Zuffa filed a notice of removal to federal district court in HDNet's declaratory judgment action brought against the company in Texas district court last month. [FULL STORY at SHERDOG.COM]

UFC Owners Defendants in Xyience Lawsuit

I have a piece up on Sherdog.com this afternoon detailing the latest developments in a civil lawsuit brought by Xyience shareholders against the company and its directors. The lead:

Xyience's bankruptcy proceeding is set to come to a close April 1 with a public auction, but the dispute between dissident shareholders and the company's directors appears to be far from over. Publish Post

Last December shareholders, led by Ronald Soloman, who controls 35 percent of Xyience's outstanding shares by proxy, filed suit against Xyience and its directors for breach of fiduciary duty to the company's shareholders.

On March 13 the plaintiff shareholders amended their complaint to include Fertitta Enterprises and Zyen, private companies owned by UFC co-owners Frank and Lorenzo Fertitta, as defendants. The complaint alleges that Zyen and Fertitta Enterprises aided and abetted Xyience's corporate directors in breaching their fiduciary duty to shareholders as well as engaged in a conspiracy to defraud shareholders.

FULL STORY: UFC Owners Defendants in Xyience Lawsuit

Xyience Auction Set for April 1

I have a story up at Sherdog.com on the latest developments in the Xyience bankruptcy proceeding, including promotional materials used to solicit bids on the company. The lead:

A buyer has been found for Xyience in its bankruptcy proceeding.

On Feb. 22, Xyience entered into a preliminary purchase agreement with Manchester Consolidated Corporation. Under terms of the agreement, Manchester will pay $15,017,000 for the company -- $200,000 in cash to Xyience plus the assumption of $14.8 million in secured debt held by Zyen, LLC.

However, the agreement is subject to a competitive bidding process that will culminate in a court auction on April 1, provided other qualified bidders express interest in purchasing Xyience.

FULL STORY: Xyience Auction Set for April 1

Zuffa, Couture Have Different Takes on Preliminary Injunction

I have a new piece up at Sherdog.com this afternoon with further insight and analysis into last week's action in Zuffa v. Couture. Included is a breakdown of each party's press release, new insight into last week's hearing, a preview of this Thursday's preliminary discovering hearing, and details of a dispute between the IFL and Xtreme Couture. The lead:

Judge Jennifer Togliatti handed down the first ruling last Thursday in the contentious Zuffa v. Randy Couture proceeding, issuing a preliminary injunction barring Couture's participation in the IFL's event the following day. However, the impact of the ruling is open to interpretation and neither party has been shy about offering its own version.

FULL STORY: Zuffa, Couture Have Different Takes on Preliminary Injunction

Zuffa Wins Preliminary Injunction

I have a piece covering yesterday's preliminary injunction hearing in Zuffa v. Couture up at Sherdog.com. Zuffa's motion was granted, but it essentially ended up being moot:

The victory, however, was a shallow one, as the court noted that many of the issues regarding Couture's involvement in the event had become moot. As Sherdog.com reported Thursday night, prior to the ruling the IFL agreed remove "Xtreme Couture" from the event, including any references on its Web site, as a professional courtesy to Couture. In an amended affidavit filed yesterday with the court, Couture further stated that he had no intention of attending the event.

FULL STORY: Zuffa Wins Preliminary Injunction

Professional Courtesy: Xtreme Couture Out, Team Tompkins In

No word yet on the outcome of today's preliminary injunction hearing in Zuffa v. Couture, but MMAPayout.com has learned that the athletes fighting at tomorrow night's IFL event will compete under the Team Tompkins banner, not Xtreme Couture.

Joe Favorito, IFL Senior Vice President of Communications issued the following statement to MMAPayout.com:

Given the ongoing litigation between Extreme Couture and the UFC, we were asked by Extreme Couture Wednesday to not use the Extreme Couture camp name in our event this Friday. Out of respect for Randy and his team in this difficult situation, the camp will take the name Team Tompkins. Shawn Tompkins is coaching this Friday as already announced for this Friday's event. The IFL is not in any way involved in this litigation, we are doing this out of professional courtesy for Randy and his group.

Developing...

Zuffa v. Couture Preliminary Injunction Ruling Expected Today

I have a new piece up at Sherdog.com previewing today's hearing in Zuffa v. Couture with a look at both sides briefs and the back story of the IFL incident, as well as details on the role Couture's promotional contract is playing in the proceeding, plus a look at Couture's motion to dismiss several claims in the case. The lead:

Months of verbal sparring between Zuffa and Randy Couture (Pictures) should have some resolution late Thursday afternoon. In front of Judge Jennifer Togliatti, in Nevada District Court, Zuffa is seeking a preliminary injunction preventing Couture from "engaging in any promotion or production of any events or programming related to unarmed combat during the one-year Restricted Period in his Employment Agreement." This includes, but is not limited to, the use of Couture's likeness by the IFL and his participation in this Friday's IFL event in Las Vegas.

FULL STORY: Zuffa v. Couture Preliminary Injunction Ruling Expected Today

Preliminary Injunction Ruling Delayed in Couture Case

Greg Savage has an excellent account of yesterday's hearing in Zuffa v. Couture up at Sherdog.com, complete with quotes from the court room. The issue basically boils down to what the phrase from the contract "involved with any promoter" means.

Couture's attorney:

The conduct is not promoting. The conduct is not conducting a business related to unarmed combat other than Xtreme Couture, which was excluded from the employment agreement.

Zuffa's attorney:

The words ‘involved with any other promoter' are broad for a reason. Because we don't want him involved with any other promoter. We pay him hundreds of thousands of dollars not to be involved with any other promoter. That was the consideration for the contract and the simple fact of the matter is that someone has whispered in his ear that maybe he can make more money doing something somewhere else, doing something he shouldn't be doing under this contract. And he has decided, for whatever reasons, be they avarice or whatever, that he is going to do them, and in the course of doing so, sully the good name of the individuals that made him a multi-millionaire 10 times over.

The hearing was continued until Thursday afternoon in order to obtain an affidavit from the IFL regarding the effect the injunction would have on their show on Friday. Couture's attorney suggested that an adverse ruling might force the promotion to cancel the show, a notion which Zuffa's attorney called "nonsense."

Update: Zuffa v. Couture

The parties were in court yesterday for a hearing on Zuffa's motion for a preliminary injunction enforcing the non-compete provision of Couture's employment contract. Specifically, Zuffa is trying to stop the use of the Xtreme Couture brand by the IFL in promoting its 2/29 event. The proceedings were continued until Thursday because the judge needed more information in order to make a ruling.

More details to come later today. Sherdog's Greg Savage was in the court room and I have written up each side's motions on the matter.

Update: Zuffa v. Couture

While MMAPayout.com has been focused on HDNet Fights v. Zuffa in Texas, there have been fresh, albeit expected, developments in Zuffa v. Couture in Nevada. Randy Couture filed a motion to dismiss this week in response to the complaint, while a hearing regarding Zuffa's motion for an injunction was moved from 3/5 to 2/26.

The hearing next week will determine Couture's availability as a cornerman on next Friday's IFL event in Las Vegas.

HDNet Fights Has Contract with Couture; Question is When It Begins

I have a piece up at Sherdog.com with new details on HDNet Fight's lawsuit against Zuffa. The lead:

Last week Mark Cuban's HDNet Fights made headlines when it sued Zuffa, parent company of the UFC, in district court in Dallas. As first reported by Sherdog.com, the suit seeks declaratory relief concerning Randy Couture's contractual status under a promotional contract with Zuffa.

New details of the action have been revealed in the complaint obtained by Sherdog.com. According to the filing, HDNet Fights has entered into a contract with Couture that is scheduled to commence upon the expiration of his Zuffa promotional agreement. At that time, the company plans to promote a fight between Couture and Fedor Emelianenko in Dallas, assuming terms can be reached with the highly regarded Russian heavyweight.

FULL STORY: HDNet Fights Has Contract with Couture; Question is When It Begins

SEE ALSO: Upon Closer Examination: Impact of HDNet v. Zuffa on Couture-UFC Dispute

Upon Closer Examination: Impact of HDNet v. Zuffa on Couture-UFC Dispute

HDNet Fights shocked the MMA industry this week when it entered the legal fray of the ongoing dispute between Randy Couture and the UFC. The complaint has not surfaced yet, but from conversations with those familiar with it and the larger legal proceedings, MMAPayout.com has identified several issues that bear watching.

The most interesting immediate legal issue raised by the suit is the exclusive jurisdiction/venue clause contained by all Zuffa promotional contracts. The clause, a standard feature of contract law, names the 8th Judicial District of Nevada as the exclusive site of any litigation arising out of the contract. Because HDNet Fights is not a party to the contract, it is presumably not bound by the clause, therefore allowing the action to proceed in Texas. However, regardless of the venue, the contract will interpreted under Nevada law.

There are several potential advantages of proceeding in Texas. First, the state is believed to have more lenient legal standards concerning declaratory judgments. The ripeness doctrine in particular is reportedly more plaintiff friendly in Texas than Nevada. Ripeness is a legal term that refers to whether or not an issue is ready to be decided in court.

Another obvious advantage is the shifting of the home field advantage. Lawyers often worry about "home cooking" when one of the parties has strong ties to the local community in which a case is pending, and there is no doubt that Nevada is Zuffa's comfort zone. However, sources have told MMAPayout.com that the judge handling the case in Las Vegas has a reputation for fairness and Couture is expected to receive a fair shake. Nonetheless, in Las Vegas HDNet Fights and/or Couture must find local counsel to battle Zuffa's experienced local attorneys, whereas in Texas, it is Zuffa that will be forced to retain new counsel licensed to practice in Texas.

The biggest advantage of the move may be the systemic shock it represents to Zuffa. Zuffa is used to dictating the terms, timing, and location of its battles. By unexpectedly filing suit in Texas, HDNet Fights surprised Zuffa and put the company on its heels. Essentially, until this point the company has been on the offensive in the Couture dispute. Now it must play defense.

Another significant benefit for Couture that can't be overlooked is legal fees. With HDNet Fights shouldering the declaratory judgment action, Couture stands to save hundreds of thousands of dollars in legal fees. This also negates the advantage Zuffa has over Couture when it comes to financial resources. Without HDNet's "support," Couture faced the real possibility of being financially strained by the proceedings, providing Zuffa with the kind of leverage necessary to force a favorable settlement and even potentially force Couture back into the octagon. At the end of the day, Mark Cuban, like the Fertittas, can spend whatever he deems necessary in pursuit of a favorable outcome.

It remains to be seen whether the Texas court will accept the case and what Zuffa's response will be. Zuffa could ask for removal to Federal Court under diversity of citizenship, however, that move may be complicated if the company is also registered in Texas. It also seems likely that Zuffa will move to add HDNet Fights and possibly Mark Cuban himself to its lawsuit against Couture in Nevada, using the Texas suit as evidence of a conspiracy to commit tortious acts. Ironically, that move might play into Couture's hands by allowing HDNet Fights to shoulder the financial burden there as well.

If the Texas court does exercise its jurisdiction and ultimately enters a decision in the case, several more complex legal issues may arise. Per the doctrine of res judicata, an earlier resolution of Couture's contractual status by a Texas court would presumably be binding in Nevada. However, Nevada might be reluctant to abide by Texas's interpretation of Nevada contract law under the circumstances.

If Texas and Nevada were to each offer competing interpretations of the contract, the dispute could enter Federal Court for a final resolution. In such a scenario, it seems hard to imagine the Federal Courts enforcing a Texas court's interpretation of a complex contractual issue under Nevada law over a Nevada court's own interpretation.

Despite many uncertainties, one fact is very clear: the entry of HDNet Fights into the dispute significantly changes the equation for all parties involved moving forward.

Special Thanks to Jeff Thaler of FightOpinion.com and JM.